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Cdee#2

This document provides information and examples related to accounting transactions and bank reconciliation. It includes: 1. A table describing how to increase or decrease common accounts and their normal balances. 2. An example of calculating cost of goods sold for a company using periodic inventory accounting. 3. Three cases calculating missing values in the cost of goods sold equation. 4. Equations to calculate net sales, cost of goods sold, gross margin, income from operations, and net income with missing terms. 5. Two examples of transactions to record with journal entries. 6. A bank reconciliation problem identifying deposits in transit, collections, returned checks, errors to correct, and service charges to record.

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106 views

Cdee#2

This document provides information and examples related to accounting transactions and bank reconciliation. It includes: 1. A table describing how to increase or decrease common accounts and their normal balances. 2. An example of calculating cost of goods sold for a company using periodic inventory accounting. 3. Three cases calculating missing values in the cost of goods sold equation. 4. Equations to calculate net sales, cost of goods sold, gross margin, income from operations, and net income with missing terms. 5. Two examples of transactions to record with journal entries. 6. A bank reconciliation problem identifying deposits in transit, collections, returned checks, errors to correct, and service charges to record.

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ሔርሞን ይድነቃቸው
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WORK SHEET #2

1. In the following table, indicate how to increase or decrease (debit or credit) each account, and indicate its
normal balance (debit or credit).
Title of Account Increased by Decreased by Normal Balance
Merchandise Inventory
Sales
Sales Returns and Allowances
Sales Discounts
Accounts Receivable
Purchases
Purchase Returns and Allowances
Purchase Discounts
Accounts Payable
Transportation-In

2. Cramer Company uses periodic inventory procedure. Determine the cost of goods sold for the company
assuming purchases during the period were BR. 40,000, transportation-in was BR. 300, purchase returns and
allowances were BR. 1,000, beginning inventory was BR. 25,000, purchase discounts were BR. 2,000, and
ending inventory was BR. 13,000.
3. In each case, use the following information to calculate the missing information:

Case 1 Case 2 Case 3


Gross sales $ 640,000 $? $?
Sales discounts ? 25,600 19,200
Sales returns and allowances 19,200 44,800 32,000
Net sales 608,000 1,209,600
Merchandise inventory, January 1 256,000 384,000
Purchases 384,000 768,000
Purchase discounts 7,680 13,440 12,800
Purchase returns and allowances 24,320 31,360 32,000
Net purchases 352,000 672,000
Transportation-in 25,600 38,400 32,000
Net cost of purchases 377,600 761,600 ?
Cost of goods available for sale ? 1,081,600 1,088,000
Merchandise inventory, December 31 ? 384,000 448,000
Cost of goods sold 320,000 ? 640,000
Gross margin 512,000 320,000
4. In each of the following equations supply the missing term(s):
a. Net sales = Gross sales - (______________________ + Sales returns and allowances).
b. Cost of goods sold = Beginning inventory + Net cost of purchases - ________ ________.
c. Gross margin = ________ ________ - Cost of goods sold.
d. Income from operations = __________ _________ - Operating expenses.
e. Net income = Income from operations + _________ ________ - ________ ________.

1
5. Problem A
a. Spencer Sporting Goods Company engaged in the following transactions in April 2010
Apr. 1 Sold merchandise on account for BR. 288,000; terms 2/10, n/30, FOB shipping point, freight collect.
Apr. 5 BR. 43,200 of the goods sold on account on April 1 were returned for a full credit. Payment for these
goods had not yet been received.
Apr. 8 A sales allowance of BR. 5,760 was granted on the merchandise sold on April 1 because
the merchandise was damaged in shipment.
Apr. 10 Payment was received for the net amount due from the sale of April 1.
b. High Stereo Company engaged in the following transactions in July 2010.
July 2 Purchased stereo merchandise on account at a cost of BR. 43,200; terms 2/10, n/30, FOB destination,
freight prepaid.
July 15 Sold merchandise for BR. 64,800, terms 2/10, n/30, FOB destination, freight prepaid.
July 16 Paid freight costs on the merchandise sold, BR. 2,160.
July 20 High Stereo Company was granted an allowance of BR. 2,880 on the purchase of July 2 because
of damaged merchandise.
July 31 Paid the amount due on the purchase of July 2.
Required: Prepare journal entries to record the transactions.
6. At December 31, 19x8 the cash accounts in Binda company’s general ledger had a debit balance of Br.
18,434,27. The Dec. 31 bank statement showed a balance of Br. 19,726.40 in reconciling the two amounts.
You discover the following.
a. Bank deposits made by Binda co. on Dec. 31 amounting to Br. 2,145.40 did not appear on the blank
statement.
b. A non-interest bearing note receivable for Br. 2,000 left with the bank for collection, was collected by
the bank near the end of December. The bank credited the proceeds, less a Br. 5.00 collection charge, on
the bank statements. Binda Company has not recorded the collection.
c. Accompanying the bank statement is a debit memo indicating that chinkete company’s check for Br. 450
was charged against Binda’s bank account on Dec. 30 because of insufficient funds.
d. Check No. 586, written for advertising expense of Br. 869.10, was recorded, as Br. 896.10 is Binda
company’s cash payments journal.
e. A comparison of the paid checks returned by the bank with the cash payments journal revealed the
following checks still outstanding at Dec. 31
No. 561 Br. 746.63
No. 588 666.40
No. 593 525.50
f. The bank mistakenly charged Binda company’s account for check printing costs of Br. 30.50, which
should have been to Banda Company.
g. The bank charged Binda company’s account Br. 42,50 as bank service charge. No entry has been made
in Binda’s records for this expense.

Required:
a) Prepare a bank reconciliation statements as of Dec. 31, 19x8
b) Record the necessary journal entries based on bank reconciliation

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